Earnings Preview: Can LNKD Keep Killing It?

The social media site has an impeccable track record

Since coming public in late May of 2011, LinkedIn (NYSE:LNKD) has consistently beat Wall Street’s earnings estimates. In the last two quarters, for example, it dwarfed the Street’s slated numbers by 84% and 100%, respectively.

It’s no wonder that the stock has been a huge winner then, gaining over 330% from its offer price of $45 per share. Yes, shares are now nearing the $200 mark.

The question, of course, is whether or not the company keep up the momentum … and we’ll get a glimpse of the answer later today when LinkedIn reports its Q1 results.

Analyst forecasts are for earnings of 30 cents per share on revenues of $317.7 million. This compares to 15 cents a share and $188.5 million in revenues for the same period a year ago.

There’s a chance LinkedIn may yet again post a blow-out quarter, as a key to the company’s wild success is its massive user base of over 200 million. All in all, LinkedIn has become the de facto digital resume for people.

Plus, the company has crafted three solid business models, which include advertising, premium subscriptions and recruiting. And to push things even harder, LinkedIn has been investing heavily in its salesforce.

Still, despite all this, it is never easy to keep up hyper-growth. Even a small slip can mean a big drop in the stock price; it’s all about expectations.

Besides, investors are already expecting near perfection. Consider that the company is trading for over 95 times forward earnings vs. 37 for Facebook (NASDAQ:FB) and 16 for Google (NASDAQ:GOOG).

It’s no wonder that even Wall Street is getting a bit squeamish. A total of 15 analysts have a “hold” on the stock while 11 have a “buy” rating. Plus, the average price target is $178, almost 10% lower than the current market value over $197.

With that in mind, what should you keep an eye on in LinkedIn’s Q1 results? Well, unsurprisingly the most important is perhaps mobile. The company has revamped its mobile apps for the Apple (NASDAQ:AAPL) iPhone and Google’s Android and acquired Pulse, a newsreader.

On the downside, though, the transition to mobile could mean a weakening of advertising revenues since the rates tend to be lower, at least when compared to traditional ads for the desktop.

Also keep an eye on continued user growth. I expect LinkedIn to deliver on this yet again. While there is probably saturation in the U.S. and Europe, the fact remains that there is still lots of room for growth in emerging markets, especially in Asia.

Still, the bar is high, and user growth sure isn’t enough for LinkedIn to keep it’s stellar run going.

Based in Silicon Valley, Tom Taulli is in the heart of IPO land. On a regular basis, he talks with many of the top tech CEOs and founders trying to find the next hot deals and finding out which start-ups are stinkers.

A long-time follower of the IPO scene, back in 1999 Tom started one of the first sites in the space called WebIPO. It was a place where investors got research as well as access to deals for the dot-com boom. Tom also wrote the top-selling book, Investing in IPOs. In it, he covers all the aspects of analyzing an IPO, such as reading the prospectus, detecting the risk factors and understanding some of the arcane regulations. But don’t worry — if that process is too intimidating for you, thankfully Tom will do the legwork for you right here in the IPO Playbook blog.

Tom is routinely quoted in the media about upcoming deals with his interviews on CNBC and Bloomberg TV, but he is eager to take your questions too. You can message him on Twitter at @ttaulli. And feel free to weigh in via the comments section on any of his IPO Playbook posts.